89280 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Rules and Regulations 

1Public Law 92–181, 85 Stat. 583. 

2 12 U.S.C. 2207. 

Ocean, and the Gulf of Mexico. This 

district shall have 10 members and 10 

alternates. 

(b) [Reserved] 

■ 11. In § 905.120, revise paragraphs (d) 

and (e) and remove paragraphs (f) and 

(g). 

The revisions read as follows: 

§ 905.120 Nomination procedure. 

* * * * * 

(d) At each meeting each eligible 

person may cast one vote for each of the 

persons to be nominated to represent 

the district or group, as the case may be. 

(e) Voting may be by written ballot. If 

written ballots are used, all ballots shall 

be delivered by the chairman or the 

secretary of the meeting to the agent of 

the Secretary. If written ballots are not 

used, the committee’s representative 

shall deliver to the Secretary’s agent a 

listing of each person nominated and a 

count of the number of votes cast for 

each nominee for grower member and 

alternate. Said representative shall also 

provide the agent the register of eligible 

voters present at each meeting, a listing 

of each person nominated, and the 

number of votes cast. 

■ 12. In § 905.150, revise paragraph (d) 

to read as follows: 

§ 905.150 Eligibility requirements for 

public member and alternate member. 

* * * * * 

(d) The public member should be 

nominated by the Citrus Administrative 

Committee and should serve a 2-year 

term which coincides with the term of 

office of grower members of the 

Committee. 

Erin Morris, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2023–28315 Filed 12–26–23; 8:45 am] 

BILLING CODE P 

FARM CREDIT ADMINISTRATION 

12 CFR Parts 614 and 620 

RIN 3052–AD54 

Loan Policies and Operations 

AGENCY: Farm Credit Administration. 

ACTION: Final rule. 

SUMMARY: The Farm Credit 

Administration (FCA, we, or our) is 

amending regulations governing young, 

beginning, and small farmers and 

ranchers (YBS). The final rule clarifies 

the responsibilities of funding banks in 

the review and approval of direct lender 

association YBS programs, strengthens 

funding bank internal controls, and 

bolsters YBS business planning. 

DATES: This regulation will be effective 

the later of February 1, 2024, or at least 

30 days after publication in the Federal 

Register during which either or both 

Houses of Congress have been in 

session. We will publish a notice of the 

effective date in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: 

Technical information: Jessica 

Tomlinson-Potter, Senior Policy 

Analyst, Office of Regulatory Policy, 

(703) 819–4667, TTY (703) 883–4056, 

potterj@fca.gov or Legal information: 

Hazem Isawi, Senior Attorney, Office of 

General Counsel, (703) 883–4022, TTY 

(703) 883–4056, isawih@fca.gov. 

SUPPLEMENTARY INFORMATION: 

I. Objectives of the Final Rule 

The objectives of this final rule are to: 

• Increase direct lender associations’ 

YBS activity to a diverse population of 

borrowers; 

• Reinforce the supervisory 

responsibilities of the funding banks, 

authorized by section 4.19 of the Farm 

Credit Act; and 

• Require each direct lender 

association to enhance the strategic plan 

for their YBS program. 

When developing YBS programs, 

direct lender associations should 

consider marketing to all populations of 

YBS farmers and ranchers. Underserved 

communities and groups can be 

overlooked or excluded from marketing 

efforts and education outreach, leaving 

out a potential borrowing base. 

Underserved groups include those 

who have been subjected to racial, 

ethnic, or gender prejudice because of 

their identity as members of the group 

without regard to their individual 

qualities. Examples of underserved 

communities include, but are not 

limited to, Black or African American, 

American Indian and Alaskan Native, 

Hispanic, Asian and Pacific Islander, 

LGBTQIA+, women, veterans, and 

persons with disabilities. These are 

examples of communities with a high 

potential for individuals who may fall 

into the Y, B, and/or S categories of 

borrowers, and direct lender 

associations should target such 

communities specifically to reach the 

entire universe of potential borrowers. 

Underserved communities can often be 

reached in schools and universities, 

professional and social organizations, at 

community gatherings, and local events. 

Every effort should be made to reach 

the entire universe of potential Y, B, and 

S borrowers. Direct lender associations 

should also work with their local Farm 

Service Agency representatives to assist 

the Farm Credit System with its 

directive to serve all creditworthy Y, B, 

and S borrowers by breaking down 

bureaucratic barriers to entry. 

II. Background 

The Farm Credit Act of 1971, as 

amended (Act),1 establishes the Farm 

Credit Administration as the safety and 

soundness regulator of the Farm Credit 

System (FCS or System). As stated in 

the FCA Strategic Plan for FYs 2018– 

2023, our mission is to ensure that 

System institutions are safe, sound, and 

dependable sources of credit and related 

services for all creditworthy and eligible 

persons in agriculture and rural 

America. The System has a unique 

mission to serve YBS farmers and 

ranchers. Section 4.19 of the Act 2

requires each direct lender association 

to establish a program to furnish sound 

and constructive credit and related 

services to YBS farmers and ranchers. 

We continue to believe the System’s 

YBS mission is important to enable 

small and start-up farmers and ranchers 

to make successful entries into 

agricultural production. Also, we 

believe it is important to ensure 

marketing and outreach efforts include 

all eligible and creditworthy persons, 

with specific outreach to achieve 

diversity and inclusion. The System’s 

YBS mission is also critical to facilitate 

the transfer of agricultural operations 

from one generation to the next. We 

remain committed to ensuring the 

System fulfills its important mission to 

YBS farmers and ranchers. 

We published a proposed rule on June 

16, 2022 (NPRM), recommending 

updates to FCA’s YBS regulations, 

which were last updated almost 20 

years ago. This final rule largely adopts 

the proposal with certain changes made 

in response to comments, with a 

particular focus on reducing an 

increased administrative burden. 

Comment letters, along with our 

responses are discussed below. 

III. Comments and Our Responses 

The comment period ended August 

15, 2022. We received 67 comment 

letters. Most comments came from 

System institutions or persons affiliated 

with the System, with one letter from 

the Farm Credit Council (Council) 

acting on behalf of its membership. We 

also received three letters from trade 

groups representing commercial 

banking. 

Most commenters requested we 

withdraw the proposed rule and keep 

the existing regulations in place. Some 

commenters offered solutions to bolster 

practices such as continued 


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collaboration with FCA and System 

workgroups without changes to the 

existing regulation. Commenters stated 

that the rule was administratively 

burdensome, human capital intensive, 

difficult for smaller direct lenders to 

implement, and did not achieve the 

shared goal of increasing YBS activity. 

We also received comments in 

support of the proposed rule that agreed 

with the framework and accountability 

the rule requires, stating the rule 

changes should be done with more than 

incremental progress in mind. Another 

comment supported the idea of 

increased reporting. 

Specific Issues 

A. YBS Program Uniformity 

System commenters expressed 

concern that the prospect of a YBS 

rating system and the proposed 

requirements relating to funding bank 

oversight may encourage all YBS 

programs to ‘‘look alike’’ or to fit into a 

‘‘cookie cutter’’ mold. While one of the 

proposed rule’s stated objectives was to 

provide elements that will be evaluated 

as part of a rating system to measure 

year-over-year YBS progress, we did not 

propose to create any such rating system 

itself through the rulemaking. For 

clarity, however, this final rule omits 

rating system matters in its statement of 

objectives. 

Next, we disagree that the proposed 

changes to bank oversight 

responsibilities will lead to ‘‘cookie 

cutter’’ YBS programs. We have long 

encouraged direct lender associations to 

tailor YBS programs to serve the specific 

needs of borrowers in the different 

lending territories. Existing FCA 

regulation § 614.4165(c), which is 

redesignated paragraph (d) in this final 

rule, states that each direct lender 

association ‘‘must establish a program to 

provide sound and constructive credit 

and services to YBS farmers and 

ranchers in its territory.’’ The reference 

to ‘‘its territory’’ illustrates that each 

YBS program should reflect the credit 

and service needs of YBS borrowers 

within that lending territory. While this 

rulemaking enhances and strengthens 

bank oversight responsibilities and 

direct lender association YBS program 

standards, it does not prescribe or 

encourage uniformity of content among 

YBS programs. We continue to expect 

varying approaches among the direct 

lender associations, appropriate to the 

needs of borrowers in each lending 

territory. 

B. Definitions [§ 614.4165(a)] 

The proposed rule had no substantive 

changes to the definitions in current 

paragraph (a). We proposed grammatical 

changes, including removing the word 

‘‘and’’ between farmers and ranchers, 

and adjusting punctuation. We received 

one comment on the definition of a 

‘‘beginning’’ farmer; however, that term 

is not defined in regulatory text. The 

definitions in paragraph (a) will be 

finalized as proposed. 

C. Farm Credit Banks Oversight 

[Proposed § 614.4165(b)] 

Commenters frequently raised 

concerns on the topic of bank oversight. 

Two non-System commenters supported 

the concept of increased bank oversight, 

stating they would like to see reform in 

reporting and tracking, and that they 

believe bank review and approval will 

help with this. System commenters 

opposed increased bank oversight for a 

variety of reasons, which will be 

discussed as they relate to each section 

of the rule text. The proposed preamble 

stated that we believed funding banks 

were in a unique position to know the 

YBS activities of their affiliated direct 

lender associations and see how those 

associations respond to the needs of 

their respective borrowers. Commenters 

strongly disagreed, stating funding 

banks do not have ‘‘boots on the 

ground’’ and are not familiar with local 

YBS markets and needs. We considered 

this feedback as we drafted the final 

rule, which removes certain elements of 

the proposed bank oversight 

requirements. 

Proposed paragraph (b)(1) required 

each bank, among other things, to adopt 

written policies directing direct lender 

associations to establish YBS programs, 

ensure direct lender association 

coordination with others, and report to 

FCA. A bank trade group commented 

that the proposed rule lacked a 

requirement for direct involvement or 

representation of YBS farmers and 

ranchers in the process of creating and 

reviewing YBS programs. To address 

this, the commenter recommended that 

each bank be directed to adopt a written 

policy requiring the bank and any 

affiliated direct lender association to 

form a committee comprised of local 

YBS farmers and ranchers. The 

commenter further recommended that 

these committees be vested with 

authority over YBS programs, 

independent of the board of directors of 

each institution. We decline to adopt 

this recommendation because it is 

outside the scope of the proposal. 

Moreover, because Farm Credit is a 

cooperative system run by memberborrowers who elect their respective 

System institutions’ boards of directors, 

YBS farmers and ranchers are 

structurally situated to be heard and 

represented at the board level. We also 

note that as a matter of practice, many 

direct lender associations have various 

YBS committees and advisory groups 

that provide input and are involved in 

program development. We do not 

believe this additional involvement and 

representation from YBS farmers and 

ranchers is necessary at the bank level 

given the current involvement of 

member borrowers in System 

governance at their direct lender 

associations. 

Proposed paragraph (b)(1)(i) required 

each funding bank to adopt written 

policies that direct their affiliated direct 

lender associations to establish an 

annual strategic YBS plan. While we did 

not receive comments on this specific 

paragraph, we received many comments 

on the YBS strategic plan itself, which 

are addressed in section D. Direct lender 

association YBS strategic plan. Because 

the proposal for an independent YBS 

strategic plan is not being adopted in 

this final rule, the requirement for bank 

policy direction on such plan has been 

removed. 

The proposed rule redesignated 

paragraph (b)(2) of the current 

regulation as paragraph (b)(1)(ii). The 

text of this coordination requirement 

remained unchanged, but nonetheless 

we received three comments from the 

System stating it is unclear how much 

coordination between organizations is 

acceptable and how coordination can be 

objectively evaluated. Although these 

comments are outside the scope of the 

proposal’s substantive changes, 

coordination efforts are generally 

sufficient if they accomplish the 

objective that YBS programs ‘‘shall 

assure that such credit and services are 

available in coordination with other 

institutions of the Farm Credit System 

serving the territory and with other 

governmental and private sources of 

credit.’’ Act § 4.19(a). We expect that 

specific coordination efforts will be 

devised on an institution-by-institution 

basis. Paragraph (b)(1)(ii) will be 

finalized as proposed. 

Proposed paragraph (b)(1)(iii) 

required each bank to establish a policy 

to direct each affiliated direct lender 

association to submit a YBS strategic 

plan and any other information 

regarding its YBS program deemed 

necessary by the bank. We received two 

System comments and one comment 

from the Council on this requirement. In 

summary, the comments stated that 

‘‘any other information deemed 

necessary by the bank’’ was vague, 

arbitrary, and therefore burdensome. 

There was concern over inconsistency 

of requirements between the banks and 

the stifling of creativity for the direct 


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lender. Further, there was commenter 

concern on the relationship with the 

direct lender and bank being damaged, 

with various reasons listed. We received 

many comments on the strategic YBS 

plan itself, which are addressed in that 

section. Because we are not adopting the 

proposal’s requirement for an 

independent YBS strategic plan, we are 

removing proposed paragraph (b)(1)(iii) 

from this final rule. 

Proposed paragraph (b)(1)(iv) is 

redesignated as paragraph (b)(1)(iii) and 

finalized as proposed. Although we only 

proposed a redesignation from the 

current paragraph (b)(4) and a 

replacement of ‘‘agency’’ for ‘‘FCA,’’ we 

still received four comments. 

Commenters agreed that no changes 

were needed to the data reporting 

requirement of ‘‘complete and accurate’’ 

in the rule text, but they did mention 

concerns surrounding subjectivity of 

criteria, which has not been a material 

issue in the past. Commenters did not 

provide reasons this would be a concern 

going forward. 

A trade group for commercial banks 

commented that ‘‘achievements’’ may be 

interpreted as denoting completion and 

success. The commenter stated that 

since success should not be presumed, 

we should add ‘‘shortfalls’’ as an 

element for the bank to report on in 

addition to ‘‘operations’’ and 

‘‘achievements.’’ We decline to adopt 

this specific change because paragraph 

(c)(2)(ii) as finalized requires the 

operational and strategic business plan 

to discuss variances and reasons for the 

results. We expect that both positive 

and negative variances will be discussed 

in the plan. Reporting of negative 

variances thus addresses the 

commenter’s suggestion. 

We received 46 comments on 

proposed paragraph (b)(2). Two 

commenters supported funding bank 

oversight and approval while the rest 

opposed this requirement. Those in 

favor wanted to see reform in reporting 

and tracking and believed that bank 

oversight would help in that area. They 

stated that oversight and accountability 

are necessary, and this rule is a step in 

the right direction for critical 

accountability. 

Those opposed to the proposed 

changes relating to funding bank 

oversight raised the following issues: 

• cost and administrative burden; 

• negative impacts on cooperative 

structure and local control; 

• no appeal or resolution process; 

• expansion of current funding bank 

duties; 

• lack of funding bank personnel 

expertise regarding individual YBS 

markets; 

• biased, preferential, or inconsistent 

evaluation among the four funding 

banks; 

• lack of guidance on goal standards 

or what is considered acceptable/ 

successful; 

• no value added to YBS programs; 

• homogenization of YBS programs 

resulting from a ‘‘uniform’’ bank 

approval process; and 

• exam findings and communication 

to the System not warranting increased 

bank oversight. 

To address these comments, we made 

changes to the rule by: 

• removing the requirement for an 

independent YBS strategic plan and 

associated funding bank approval and 

review, 

• providing that funding bank review 

and approval shall solely be to 

determine whether the YBS program 

contains all required components, 

• updating the reference from 

paragraph (c) in the current regulation 

to paragraph (d) in the final rule, and 

• stating that funding bank 

communication of an incomplete plan 

must be in writing and sent to FCA 

within 30 days. 

The statute provides that association 

YBS programs are ‘‘[u]nder the policies 

of the Farm Credit Bank board,’’ and 

that ‘‘[e]ach program shall be subject to 

review and approval by the supervising 

bank.’’ The System’s comments and 

representations about funding bank lack 

of expertise, staff knowledge and 

capability with respect to YBS programs 

suggest there is room for the banks to 

improve their capabilities in this area. 

As in the existing regulation, banks 

will still be required to review and 

approve each direct lender association’s 

YBS program. This rule clarifies that 

such review and approval must be 

performed annually. We find this 

requirement complements—and is 

logically connected to—the bank’s 

responsibility for creating and 

submitting the operations and 

achievements report to FCA. 

Specifically, annual review and 

approval of direct lender association 

YBS programs will give each bank a 

better understanding of the programs in 

their territories and ultimately result in 

more accurate reporting to FCA. 

To address concerns about the scope 

of bank review, however, we are 

revising the regulatory text so that 

review and approval shall solely be to 

determine whether the YBS program 

contains the components of finalized 

paragraph (d). As a result, the finalized 

text more closely tracks the scope of 

review specified in the current 

regulation. Notwithstanding the 

revision, we encourage open dialogue 

between the bank and direct lender to 

continually improve program content. 

With slight changes from the 

proposal, this final rule provides that 

where a bank concludes a YBS program 

is incomplete, it must communicate that 

fact in writing to both the direct lender 

association and FCA within 30 days. 

Proposed paragraph (b)(3) required 

internal controls. Since banks are the 

main YBS reporting entity to FCA, 

having a strong internal control 

environment is critical to safety and 

soundness. We received four comments 

from the System, the Council, and a 

commercial bank trade group. The 

commercial bank trade group stated 

that, in the past, internal controls over 

YBS data reporting processes have been 

weak. They stated this resulted in 

inaccurate reporting to FCA. They went 

on to state weak reporting is a concern 

they’d like to see addressed. The System 

and Council stated that establishing new 

internal controls will create redundancy 

and inefficiencies. As discussed in 

sections above and below, direct lenders 

are not required to have an independent 

YBS strategic plan in the finalized rule. 

Therefore, bank internal control 

requirements in the proposed rule for 

direct lender YBS plans have been 

removed. The Council commented that 

banks should be able to rely on the 

internal controls of the direct lender. 

The bank’s responsibilities for review 

and approval of YBS programs and data 

compilation and reporting to FCA are 

independent of direct lenders. For this 

reason, it is necessary that each bank 

has internal controls over the processes 

they perform, just as direct lenders do. 

Each organization in the System should 

have internal controls over their 

respective YBS responsibilities. 

D. Direct Lender Association YBS 

Strategic Plan [Proposed § 614.4165(c)] 

Proposed paragraph (c)(1) required 

each direct lender association to adopt 

an independent 3-year YBS strategic 

plan to guide the direct lender’s 

required YBS program. We received 31 

comments on this requirement from the 

System and a commercial bank trade 

group, all of whom were opposed for a 

variety of reasons. 

Many stated that YBS borrowers are 

critical to the System’s sustainability, 

are an integral part of direct lender’s 

operations, and are a key component of 

the overall business plan. As such, YBS 

components are woven into almost 

every aspect of a direct lender’s annual 

business plan. Commenters went on to 

say that YBS borrowers should be 

considered in the context of the whole 

business and included as part of the 

overall business plan rather than 


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separated out. The FCS commenters 

stated that creating an independent plan 

outside of the business plan would 

create disconnected, redundant, and 

unnecessary administrative burdens. 

The FCS commenters noted that staff’s 

time could better be used serving YBS 

borrowers directly rather than 

duplicating the business plans. 

We considered this input and will not 

finalize the requirement for an 

independent YBS strategic plan. We 

agree that YBS is an integral part of 

direct lenders’ operations and should be 

incorporated as part of overall business 

planning. The intent of our proposal 

was that an independent planning 

document would put increased 

emphasis on YBS. However, the same 

goal can be achieved without creating a 

separate document. It is our intent that 

direct lenders give thoughtful 

consideration into their strategic 

lending to YBS borrowers, in both 

current and potential markets. 

While we are not changing the 

existing requirement for a 3-year 

planning period in the operational and 

strategic business plan, we still received 

comments on this area. Some 

commenters stated that a 3-year plan is 

not reasonable given volatility and 

uncertainty, making future years a 

guess. We believe it is important to be 

forward looking and innovative in 

strategic business planning. Three years 

has been established as a minimum 

planning period. We continue to believe 

that three years is appropriate for 

planning. Some commenters stated the 

requirement to adopt a 3-year plan 

within 30 days after the commencement 

of the year is not enough time to analyze 

the past year’s data and conflicts with 

other business planning activity. While 

we understand that the period around 

the new calendar year may be 

particularly busy, the timeframe for 

adoption of the plan is specified in the 

existing regulation, and we have not 

proposed a change in this regard. We 

believe the new calendar year continues 

to be an appropriate time to conclude 

activity and begin reporting processes. 

Paragraph (c)(2) of the proposed rule 

required that the strategic plan must 

detail the operations of the YBS 

program including all components in 

paragraph (d). We received no 

comments specific to this section. This 

requirement has been combined into the 

finalized (c)(1). 

In proposed paragraph (c)(3)(i), direct 

lenders were required to analyze 

performance from the previous year in 

achieving components of their YBS 

program listed in proposed paragraph 

(d). We received a comment from a 

banking trade group that analyzing only 

performance and effectiveness but not 

identifying areas to improve upon is not 

a balanced approach. While we 

understand the commenter’s point, it is 

our expectation that direct lenders take 

a balanced approach when analyzing 

performance. If a goal is not achieved, 

it must still be reported on. 

Proposed paragraph (c)(3)(ii) received 

no comments. We redesignated and 

finalized it as paragraph (c)(2)(ii). 

Proposed paragraph (c)(3)(iii) received 

no comments, and we redesignated and 

finalized it as paragraph (c)(2)(iii). We 

replaced the word, ‘‘efforts,’’ with 

‘‘qualitative factors and quantitative 

goals.’’ We added the words, ‘‘expand 

access to,’’ which derived from 

proposed paragraph (c)(3)(iv). 

We received seven comments from 

the FCS opposing proposed paragraph 

(c)(3)(iv). The requirement proposed 

that direct lenders assess the 

effectiveness in providing efforts 

resulting in credit provided to new and 

expanding YBS operations. Commenters 

discussed the high subjectivity of such 

data and stated they are unclear how 

effectiveness is measured. Examples 

were given of a person attending a 

seminar and several years later 

becoming a borrower. How would direct 

lenders track and record such activity? 

Commenters stated databases are not 

currently in place to collect such data 

and it is cost prohibitive with little 

value added to create a database. 

Commenters also believed that tracking 

this data provided no value to YBS 

borrowers. After assessing comments, 

we added the words ‘‘and expand access 

to’’ which derived from proposed 

paragraph (c)(3)(iv) to finalized 

paragraph (c)(3)(iii) and removed the 

other requirements of proposed 

paragraph (c)(3)(iv). We believe that 

tracking such data and identifying how 

direct lender association YBS programs 

are assisting and expanding access to 

credit and education for YBS farmers 

and ranchers does provide value to YBS 

farmers and ranchers by strengthening 

and improving lender’s YBS programs. 

To comply with this provision, direct 

lenders must assess how their YBS 

program components assist and expand 

access to credit and education for YBS 

farmers and ranchers. 

E. Direct Lender Association YBS 

Program [Proposed § 614.4165(d)] 

We received one comment on 

proposed paragraph (d) from a 

commercial banking trade group in 

support of the requirement. There were 

no opposing comments. The comment 

stated that the components have been 

long awaited and both qualitative and 

quantitative factors play important roles 

in YBS lending. Paragraph (d) is 

finalized as proposed. 

We received one comment from a 

commercial banking trade group 

regarding the mission statement 

requirement in proposed paragraph 

(d)(1)(i)(A). The commenter stated that 

the mission statement should explicitly 

recognize the importance of YBS and 

ensure support at the direct lender level. 

We believe the requirement is 

satisfactory as drafted in accomplishing 

this purpose, and finalized it as 

proposed. 

Proposed paragraph (d)(1)(i)(B) is 

finalized as proposed. We received two 

comments on the direct lender internal 

controls requirement in proposed 

paragraph (d)(1)(i)(B). One System 

commenter stated that adding internal 

controls adds additional time, energy, 

and costs to reporting. Internal controls 

are an existing requirement that direct 

lenders should already have in place. 

Another commenter asked that internal 

controls clarify the extent to which staff 

must take stakeholder input into 

account. While encouraged, the rule 

does not require stakeholder input, nor 

is it necessarily a component of an 

internal controls system. 

There was one comment from a 

commercial banking trade group, 

supporting the use of credit 

enhancement tools. Proposed paragraph 

(d)(1)(ii)(A) is finalized as proposed. 

Proposed paragraph (d)(1)(ii)(B) is 

finalized as proposed. It requires credit 

and related services coordination with 

System institutions, governmental and 

private sources. This is a continuation 

of requirements in existing paragraph 

(c)(3)(ii). We received nine comments 

on this requirement. One comment from 

a commercial banking trade group 

supported third-party coordination on 

credit and related services. Eight 

commenters, all from the System, 

opposed this existing requirement. 

Commenters stated that where direct 

lender associations are over-chartered 

within the same market, coordination 

efforts will entice competition rather 

than healthy collaboration. Another 

System commenter stated that the 

prospect of interterritorial competition 

was untenable and would potentially 

damage their association and members. 

Some commenters stated that 

collaboration is already occurring, and a 

regulatory requirement is not needed. 

System commenters were worried that 

this requirement may be interpreted by 

funding banks to force best practices for 

one lender onto another lender, even if 

the practices may not apply or work, to 

achieve bank approval. Commenters 

stated that statutory borrower rights 

requirements were not in the 


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commercial banks’ interest and, as such, 

posed a barrier to coordination. Another 

commenter mentioned that agencies 

such as FSA or other national YBS 

organizations already experience time 

constraints. When multiple direct 

lender associations request 

collaboration at the same time, 

particularly in over-chartered areas or 

small towns, these resource issues will 

be compounded. Lastly a commenter 

stated that the System does not have an 

adequate portal to capture and highlight 

the depth of the collaboration efforts 

that occur. As an existing requirement, 

we have seen the importance and 

benefit of third-party coordination. The 

requirement leaves the option open to 

direct lenders in choosing with which 

parties they coordinate. We understand 

that some relationships work better than 

others. Nonetheless, we encourage 

direct lenders to continue outreach and 

third-party coordination, for the 

betterment of YBS farmers and ranchers. 

Proposed paragraph (d)(1)(iii) is 

finalized as proposed. It requires 

implementation of outreach programs, 

which may include marketing and 

education. This is a continuation of 

requirements in existing paragraph 

(c)(3)(iii). We received seven comments 

on this requirement. One comment from 

a commercial banking trade group 

supported minimum requirements for 

marketing, outreach, and education. Six 

commenters, all from the System, 

opposed this existing requirement. 

Commenters stated that the rule is silent 

on criteria to determine effectiveness 

and that measuring effectiveness is 

subjective. One commenter stated that it 

would frustrate and confuse potential 

customers and business partners when a 

direct lender comes to an event with 

predetermined measurers for 

effectiveness. Another commenter asked 

if the board, management, or banks 

would be determining the effectiveness 

of activities, going on to say that this 

requirement is redundant and 

burdensome. In the existing 

requirement, the agency has not 

identified material weaknesses with 

direct lenders implementing effective 

outreach, marketing, and educational 

programs. 

We are unclear as to why carrying this 

requirement forward into the finalized 

rule would be burdensome. Results have 

shown for a direct lender YBS program 

to be successful, it is critical to have 

more components than merely the 

extension of credit. Some of these 

components include marketing to 

underserved segments, providing new 

borrower education, and listening to 

feedback from YBS farmers and 

ranchers. 

Proposed paragraph (d)(2)(i) strikes 

the word ‘‘reasonably’’ and is finalized 

as proposed. It requires using reliable 

demographic data in developing 

quantitative goals, along with 

identifying the sources of the data. We 

received seven comments on this 

requirement. One comment from a 

commercial banking trade group stated 

that quantitative goals must be bolstered 

with additional requirements and that 

more than one goal should be used. This 

commenter did not like basing the 

understanding of goals on reasonably 

reliable demographic data and stated 

that sources should be recognized and 

not arbitrary. The six opposing 

commenters were all from the System. 

Commenters who opposed this 

requirement shared concerns on the 

term ‘‘reasonably reliable,’’ saying it 

provides uncertainty and results in 

highly subjective interpretations, asking 

who is to have final determination if the 

data is reasonably reliable or not. 

Validation of such data and timeliness 

were also raised as concerns. Opposing 

commenters stated validating data 

would raise significant time and 

resource concerns. They also stated that 

USDA census data is several years old 

before release, not making it the most 

up-to-date and reliable. Commenters 

questioned whether direct lenders 

would be expected to contract with 

third parties while awaiting USDA data 

availability to meet this requirement. 

Opposing commenters also raised 

concerns that requiring additional 

quantitative goals will increase the 

potential for compromises to be made to 

existing programs that are effective as a 

means to meet new goals, adding that 

there is no incentive for direct lenders 

to set aggressive goals which may not be 

met and then result in a lower FCA 

rating. We believe that striking the word 

‘‘reasonably’’ addresses these 

comments. Reliable data is a key 

component in developing effective 

goals. It is our expectation that the 

direct lender associations obtain the 

best data available to them when 

developing goals. 

Proposed paragraphs (d)(2)(i)(A), 

(d)(2)(i)(B), (d)(2)(i)(C), and (d)(2)(i)(D) 

are finalized as proposed. They identify 

the minimum quantitative goals that a 

direct lender must establish annually. 

These requirements carry over 

unchanged from existing paragraphs 

(c)(2)(i) through (iv). We received one 

comment from a commercial banking 

trade group on proposed paragraphs 

(d)(2)(i)(A) through (C), stating the goals 

are arbitrary and unmoored and should 

be bolstered with additional 

requirements. We did strengthen this 

existing requirement by requiring direct 

lenders to use at least one of the goal 

categories listed as opposed to the 

existing requirement that states that 

such targets may include one of the goal 

categories listed. Historically, direct 

lenders rarely used categories other than 

those listed in the regulation. Keeping 

the same categories ensures that data 

can be compared consistently over a 

range of time periods. Further, databases 

are already in place in the System to 

track these categories, which helps 

minimize regulatory burden and costs. 

We note these are only minimums and 

some direct lenders can and do use a 

combination of these goals or other 

categories. 

Proposed paragraph (d)(2)(i)(D), 

pertaining to goals for capital committed 

to loans made to YBS borrowers, is 

finalized as proposed. It is an 

unchanged requirement compared with 

existing paragraph (c)(2)(iv), however, 

we did receive two opposing comments 

from a commercial bank trade group and 

the System. Both commenters had 

similar observations that the 

requirement was arbitrary and 

unmoored. One commenter went on to 

say there is a lack of criteria to 

determine how much capital a direct 

lender should allocate to YBS. There 

was concern that both FCA and the 

funding bank will have difficulty 

determining where a program is 

deficient in the capitalization goal. The 

final rule does not require direct lenders 

to have a capital goal. Paragraph (d)(2) 

only requires each direct lender to have 

one of the listed goals, not all. 

Nonetheless, we believe a capital 

commitment is a best practice and is 

one method of allowing direct lenders to 

serve YBS borrowers who may have a 

higher risk profile, while at the same 

time mitigating the lender’s overall risk 

in the credit relationship. 

F. Annual Report Information 

Concerning YBS [Proposed 

§ 620.5(k)(2)] 

We received no comments on the 

renumbering changes in proposed 

§ 620.5(k)(2). It will be finalized as 

proposed. 

G. Other Matters 

One system commenter concluded 

that because the NPRM states that ‘‘YBS 

components will no longer be required 

as part of § 618.8440,’’ FCA is 

impermissibly trying to modify 

§ 618.8440 through the proposed rule. 

No part of this rulemaking revises 

§ 618.8440 or changes its requirements. 

Our statement in the NPRM merely 

observed the effect of the proposed 

deletion of paragraph (e) of § 614.4165, 

which requires each direct lender 


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Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Rules and Regulations 89285 

association’s YBS program targets and 

goals to be included in its operational 

and strategic business plan (as 

separately required under § 618.8440). 

In any case, since the final rule does not 

adopt the proposed rule’s wholesale 

deletion of paragraph (e) of § 614.4165, 

and instead moves it with minor 

changes to paragraph (c)(1), the 

substantive requirement to include YBS 

program components in the operational 

and strategic business plan will remain 

intact. As a result, the commenter’s 

concern is addressed. 

IV. Regulatory Flexibility Act and 

Congressional Review Act 

Pursuant to section 605(b) of the 

Regulatory Flexibility Act (5 U.S.C. 601 

et seq.), FCA hereby certifies that this 

final rule will not have a significant 

economic impact on a substantial 

number of small entities. Each of the 

banks in the Farm Credit System, 

considered together with its affiliated 

direct lender associations, has assets 

and annual income in excess of the 

amounts that would qualify them as 

small entities. Therefore, Farm Credit 

System institutions are not ‘‘small 

entities’’ as defined in the Regulatory 

Flexibility Act. 

Under the provisions of the 

Congressional Review Act (5 U.S.C. 801 

et seq.), the Office of Management and 

Budget’s Office of Information and 

Regulatory Affairs has determined that 

this final rule is not a ‘‘major rule,’’ as 

the term is defined at 5 U.S.C. 804(2). 

List of Subjects 

12 CFR Part 614 

Agriculture, Banking, Banks, Flood 

insurance, Foreign trade, Reporting and 

recordkeeping requirements, Rural 

areas. 

12 CFR Part 620 

Accounting, Agriculture, Banking, 

Banks, Reporting and recordkeeping 

requirements, Rural areas. 

PART 614—LOAN POLICIES AND 

OPERATIONS 

■ 1. The authority citation for part 614 

continues to read as follows: 

Authority: Secs. 1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 

1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13, 2.15, 

3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 

4.12A, 4.13B, 4.14, 4.14A, 4.14D, 4.14E, 4.18, 

4.18A, 4.19, 4.25, 4.26, 4.27, 4.28, 4.36, 4.37, 

5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.8, 7.12, 7.13, 

8.0, 8.5 of the Farm Credit Act (12 U.S.C. 

2011, 2013, 2014, 2015, 2017, 2018, 2019, 

2071, 2073, 2074, 2075, 2091, 2093, 2094, 

2097, 2121, 2122, 2124, 2128, 2129, 2131, 

2141, 2149, 2183, 2184, 2201, 2202, 2202a, 

2202d, 2202e, 2206, 2206a, 2207, 2211, 2212, 

2213, 2214, 2219a, 2219b, 2243, 2244, 2252, 

2279a, 2279a–2, 2279b, 2279c–1, 2279f, 

2279f–1, 2279aa, 2279aa–5); 12 U.S.C. 2121 

note; 42 U.S.C. 4012a, 4104a, 4104b, 4106, 

and 4128. 

■ 2. Section 614.4165 is revised to read 

as follows: 

§ 614.4165 Young, beginning, and small 

farmers and ranchers. 

(a) Definitions. 

(1) For purposes of this subpart, the 

term ‘‘credit’’ includes: 

(i) Loans made to farmers, ranchers, 

and producers or harvesters of aquatic 

products under title I or II of the Act; 

and 

(ii) Interests in participations made to 

farmers, ranchers, and producers or 

harvesters of aquatic products under 

title I or II of the Act. 

(2) For purposes of this subpart, the 

term ‘‘services’’ includes: 

(i) Leases made to farmers, ranchers, 

and producers or harvesters of aquatic 

products under title I or II of the Act; 

and 

(ii) Related services to farmers, 

ranchers, and producers or harvesters of 

aquatic products under title I or II of the 

Act. 

(b) Farm Credit banks oversight. 

(1) Each Farm Credit Bank and 

Agricultural Credit Bank must adopt 

written policies that direct: 

(i) The board of each affiliated direct 

lender association to establish a 

program to provide sound and 

constructive credit and related services 

to young, beginning, and small farmers, 

ranchers, and producers or harvesters of 

aquatic products (YBS farmers and 

ranchers or YBS); 

(ii) Each affiliated direct lender 

association to include in its YBS 

program provisions ensuring 

coordination with other System 

institutions in the territory and other 

governmental and private sources of 

credit; and 

(iii) The bank to provide the FCA a 

complete and accurate annual report 

summarizing the YBS program 

operations and achievements of its 

affiliated direct lender associations. 

(2) Annually, the YBS program of 

each direct lender association must be 

reviewed and approved by its funding 

bank, provided review and approval 

shall solely be to determine whether the 

YBS program contains all required 

components as set forth in paragraph (d) 

of this section. Any conclusion by the 

bank that a YBS program is incomplete 

must be communicated in writing to the 

direct lender association and to the FCA 

within 30 days. 

(3) Each Farm Credit Bank and 

Agricultural Credit Bank must 

implement internal controls for 

requirements in paragraphs (b)(1)(iii) 

and (b)(2) of this section. 

(c) Direct lender association YBS 

plan. 

(1) YBS program components outlined 

in paragraph (d) of this section must be 

included in each direct lender 

association’s operational and strategic 

business plan for at least the succeeding 

3 years (as set forth in § 618.8440 of this 

chapter). 

(2) The YBS portion of the operational 

and strategic business plan must: 

(i) Analyze the direct lender 

association’s performance in the 

previous year toward achieving the 

components in paragraph (d) of this 

section; 

(ii) Discuss variances and reasons for 

the results; and 

(iii) Identify how the qualitive factors 

and quantitative goals in paragraph (d) 

of this section assist and expand access 

to credit and education for YBS farmers 

and ranchers. 

(d) Direct lender association YBS 

programs. The board of directors of each 

direct lender association must establish 

a program to provide sound and 

constructive credit and services to YBS 

farmers and ranchers in its territory. 

Each YBS program must operate in a 

safe and sound manner and within the 

direct lender association’s risk-bearing 

capacity, while meeting the unique 

needs of YBS farmers and ranchers. 

Such a program must include the 

following minimum components: 

(1) Qualitative factors— 

(i) Corporate governance. 

(A) A mission statement describing 

program objectives and specific means 

for achieving such objectives. 

(B) Internal controls that establish 

clear lines of responsibility for YBS 

strategic plan development and the 

corresponding YBS program 

implementation, tracking YBS program 

performance, and YBS quarterly 

reporting to the direct lender 

association’s board of directors. 

(ii) Credit and related services. 

(A) Efforts to offer credit and related 

services, either directly or in 

coordination with others, that are 

responsive to the needs of the YBS 

farmers and ranchers in the territory. 

Examples include customized loan 

underwriting standards, loan guarantee 

programs, fee waivers, or other credit 

enhancements commensurate with the 

credit risk approved by the board of 

directors. 

(B) Coordination with other System 

institutions in the territory and other 

governmental and private sources who 

offer credit and services to YBS farmers 

and ranchers. 


ddrumheller on DSK120RN23PROD with RULES1
89286 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Rules and Regulations 

(iii) Marketing, outreach, and 

education. Implementation of effective 

outreach programs to attract and retain 

YBS farmers and ranchers, which may 

include the use of advertising 

campaigns, educational programs, and 

advisory committees comprised of YBS 

farmers and ranchers and/or a YBS 

mentoring program to better serve and 

understand the needs of this lending 

segment. 

(2) Quantitative goals— 

(i) Annual quantitative goals. Annual 

quantitative goals for credit to YBS 

farmers and ranchers based on an 

understanding of reliable demographic 

data for the lending territory. Direct 

lender associations must identify the 

sources of data used to establish the 

goals. Such goals must include at least 

one of the following: 

(A) Loan volume and loan number 

goals for YBS farmers and ranchers in 

the territory; 

(B) Percentage goals representative of 

the demographics for YBS farmers and 

ranchers in the territory; 

(C) Percentage goals for loans made to 

new borrowers qualifying as YBS 

farmers and ranchers in the territory; or 

(D) Goals for capital committed to 

loans made YBS farmers and ranchers in 

the territory. 

(ii) Board of directors approval and 

review. Goals must be approved by the 

direct lender association’s board of 

directors and reviewed quarterly with 

adjustments made as needed. 

PART 620—DISCLOSURE TO 

SHAREHOLDERS 

■ 3. The authority citation for part 620 

continues to read as follows: 

Authority: Secs. 4.3, 4.3A, 4.19, 5.9, 5.17, 

5.19 of the Farm Credit Act (12 U.S.C. 2154, 

2154a, 2207, 2243, 2252, 2254); sec. 424, Pub. 

L. 100–233, 101 Stat. 1568, 1656 (12 U.S.C. 

2252 note); sec. 514, Pub. L. 102–552, 106 

Stat. 4102, 4134. 

■ 4. Revise § 620.5 (k)(2) to read as 

follows: 

§ 620.5 Contents of the annual report to 

shareholders. 

* * * * * 

(k) * * * 

(2) Each direct lender association 

must provide a description of its YBS 

program, including a status report on 

each program component as set forth in 

§ 614.4165 (d) of this chapter and the 

definitions of ‘‘young,’’ ‘‘beginning,’’ 

and ‘‘small’’ farmers and ranchers. The 

discussion must provide such other 

information necessary for a 

comprehensive understanding of the 

direct lender association’s YBS program 

and its results. 

* * * * * 

Dated: December 14, 2023. 

Ashley Waldron, 

Secretary, Farm Credit Administration. 

[FR Doc. 2023–27929 Filed 12–26–23; 8:45 am] 

BILLING CODE 6705–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2023–2153; Project 

Identifier MCAI–2023–00688–T; Amendment 

39–22611; AD 2023–23–09] 

RIN 2120–AA64 

Airworthiness Directives; Embraer S.A. 

(Type Certificate Previously Held by 

Yabora ̃ Indu ́ stria Aerona ́utica S.A.; 

Embraer S.A.) Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule; request for 

comments. 

SUMMARY: The FAA is adopting a new 

airworthiness directive (AD) for all 

Embraer S.A. Model ERJ 190–400 

airplanes. This AD was prompted by a 

report of unexpected wear on the wing 

hinge bearing assembly of the aileron 

surfaces found during the functional test 

of the aileron control system backlash. 

This AD requires repetitive inspections 

of the press-fitted bushings of the wing 

ailerons for migration and broken 

sealant, measurements of the distance 

between the aileron surfaces and hinge 

fittings, functional checks of the 

backlash of the wing aileron control 

system, and all applicable related 

investigative and corrective actions, as 

specified in an Ageˆncia Nacional de 

Aviac ̧a ̃o Civil (ANAC) AD, which is 

incorporated by reference. The FAA is 

issuing this AD to address the unsafe 

condition on these products. 

DATES: This AD is effective January 11, 

2024. 

The Director of the Federal Register 

approved the incorporation by reference 

of certain publications listed in this AD 

as of January 11, 2024. 

The FAA must receive comments on 

this AD by February 12, 2024. 

ADDRESSES: You may send comments, 

using the procedures found in 14 CFR 

11.43 and 11.45, by any of the following 

methods: 

• Federal eRulemaking Portal: Go to 

regulations.gov. Follow the instructions 

for submitting comments. 

• Fax: 202–493–2251. 

• Mail: U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

• Hand Delivery: Deliver to Mail 

address above between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

AD Docket: You may examine the AD 

docket at regulations.gov under Docket 

No. FAA–2023–2153; or in person at 

Docket Operations between 9 a.m. and 

5 p.m., Monday through Friday, except 

Federal holidays. The AD docket 

contains this final rule, the mandatory 

continuing airworthiness information 

(MCAI), any comments received, and 

other information. The street address for 

Docket Operations is listed above. 

Material Incorporated by Reference: 

• For material incorporated by 

reference in this AD, contact National 

Civil Aviation Agency (ANAC), 

Aeronautical Products Certification 

Branch (GGCP), Rua Dr. Orlando 

Feirabend Filho, 230—Centro 

Empresarial Aquarius—Torre B— 

Andares 14 a 18, Parque Residencial 

Aquarius, CEP 12.246–190—Sa ̃o Jose ́

dos Campos—SP, Brazil; phone 55 (12) 

3203–6600; email pac@anac.gov.br; 

website anac.gov.br/en/. You may find 

this material on the ANAC website at 

sistemas.anac.gov.br/certificacao/DA/ 

DAE.asp. 

• You may view this service 

information at the FAA, Airworthiness 

Products Section, Operational Safety 

Branch, 2200 South 216th St., Des 

Moines, WA. For information on the 

availability of this material at the FAA, 

call 206–231–3195. It is also available at 

regulations.gov under Docket No. FAA– 

2023–2153. 

FOR FURTHER INFORMATION CONTACT: 

Joshua Bragg, Aviation Safety Engineer, 

FAA, 1600 Stewart Avenue, Suite 410, 

Westbury, NY 11590; phone: 817–222– 

5366; email joshua.k.bragg@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Comments Invited 

The FAA invites you to send any 

written data, views, or arguments about 

this final rule. Send your comments to 

an address listed under ADDRESSES. 

Include ‘‘Docket No. FAA–2023–2153; 

Project Identifier MCAI–2023–00688–T’’ 

at the beginning of your comments. The 

most helpful comments reference a 

specific portion of the final rule, explain 

the reason for any recommended 

change, and include supporting data. 

The FAA will consider all comments 

received by the closing date and may 

amend this final rule because of those 

comments. 

Except for Confidential Business 

Information (CBI) as described in the 

following paragraph, and other 


ddrumheller on DSK120RN23PROD with RULES1